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Are retirement and bankruptcy compatible?

Many of our Escondido readers may feel lucky just to have a job in today's economy, which remains as stagnant as ever. The unemployment rate is too high and there are building concerns about American employees becoming a "part-time workforce." Nonetheless, millions of Americans do their best to attempt to stash funds for retirement, whether it is through an employer-based 401(k) or an individual retirement account, also known as IRAs. But if an Escondido resident is trying to save for retirement but also dealing with mounting credit debt, isn't that a problem?

According to a recent article, the tug-of-war between credit problems and saving for retirement is indeed a major problem in America. On the bright side, the article noted that some retirement plans currently act as the savings vehicle for a total of approximately $9.2 trillion in retirement funds. That is a good deal of money that has been saved by millions of Americans for their retirement years. The bad news, however, is that those same individuals who has saved this huge amount for retirement also owe approximately $4.2 trillion in debt.

The main problem appears to be the fast-approaching time when millions of baby boomers will begin retiring and depending on the funds they have saved through a lifetime of work. If those same individuals are still dealing with debt from credit cards or mortgages in their retirement years, it won't take long to deplete all the funds they have saved by paying off debt.

Any Escondido resident who finds themselves in this type of situation may consider the benefits of filing for bankruptcy. No one wants to have to deal with debt and creditors when they have retired, so getting debt discharged through a Chapter 7 bankruptcy may be the best option to approach retirement as a fresh start, as well as a well-deserved break.

Source: Business Insider, "Why Credit Card Debt Can Derail Retirement Savings," Jenna Goudreau, Nov. 5, 2013

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